Japanese Nikkei hits 27-year high as markets cheer Nafta deal

With little time left ahead of a deadline to agree to a renewed NAFTA, Canadian and US trade officials on Sunday tried to settle differences on tough issues such as protection against American tariffs.

Despite the fact it's one of Trump's favourite talking points, the politically sensitive question of greater US access to Canada'sdairy market is also no longer a hurdle, say sources familiar with the talks.

The White House's Peter Navarro said "everybody's speaking in good faith right now as we speak", on Fox Sunday.

President Trump and Canadian Prime Minister Justin Trudeau shake hands during a meeting in the Oval Office in February.

The two countries are also working on an agreement that would shield Canada if Trump goes ahead with his threat to tax imported cars, truck and auto parts.

The U.S. and Canada were under pressure to reach a deal by midnight Sunday, when the U.S. must make public the full text of the agreement with Mexico.

"They're moving towards closing the deal - it's really not a question of if, it's a question of when", said Daniel Ujczo, an Ohio-based global trade lawyer at Dickinson Wright who represents large USA automakers and auto-parts manufacturers. He blames the treaty for the loss of American manufacturing jobs and has repeatedly threatened to abandon the trade past signed in 1994, during the Clinton administration.

Conversely, Canada won on its demand to maintain NAFTA's "Chapter 19" dispute resolution mechanism-a demand that the USA opposed because it saw the mechanism as infringing on US sovereignty.

Next, the dispute settlement mechanism is going to remain in place, which is something that Canada pushed for, she pointed out.

We have heard from both sides on this issue that no deal is better than a bad deal.

By early evening it appeared high-level talks would bump right up against, and maybe past, a midnight deadline that the USA insisted needed to be met to deliver a new NAFTA agreement to Congress. Canada also agreed to open up some of its dairy market to USA producers.

In a joint statement, the two nations said the new United States-Mexico-Canada Agreement (USMCA) would "result in freer markets, fairer trade and robust economic growth in our region". One of the officials said the discussions between Canada and the US were ongoing, but progress was being made. The agreement also exempts tariffs on 2.6 million automobiles.

The Trump administration officially notified Congress of the U.S. -Mexico trade agreement on August 31.

The Trump administration struck a deal with Mexico last month to rewrite Nafta and had threatened to jettison Canada from the pact if it did not agree to concessions like opening its dairy market to U.S. farmers.

But the deal failed to resolve US tariffs on Canada's steel and aluminum exports. Lawmakers have said they do not expect Congress to vote on the deal until early next year.

Insiders got wind of a breakthrough after 14 months of tumultuous talks and just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory.